Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the fourth quarter and full year of 2021 and issued guidance for its first quarter and full year of 2022. Upland also announced the acquisition of BA-Insight, Inc., a leading provider of enterprise search solutions for global organizations.
Fourth Quarter 2021 Financial Highlights
- Total revenue was $75.7 million, a decrease of 3% from $78.2 million in the fourth quarter of 2020.
- Subscription and support revenue was $72.3 million, a decrease of 4% from $74.9 million in the fourth quarter of 2020.
- GAAP net loss was $7.5 million, or a loss of $0.24 cents per share, compared to a GAAP net loss of $5.7 million, or a loss of $0.19 cents per share, in the fourth quarter of 2020.
- Adjusted EBITDA was $25.1 million, or 33% of total revenue, compared to $26.6 million, or 34% of total revenue, in the fourth quarter of 2020.
- GAAP operating cash flow was $13.1 million, compared to GAAP operating cash flow of $21.5 million in the fourth quarter of 2020. Free cash flow was $12.9 million, compared to free cash flow of $21.2 million in the fourth quarter of 2020.
- Cash on hand as of the end of the fourth quarter of 2021 was $189.2 million.
Full Year 2021 Financial Highlights
- Total revenue was $302.0 million, an increase of 4% from $291.8 million in 2020.
- Subscription and support revenue was $287.6 million, an increase of 4% from $277.5 million in 2020.
- GAAP net loss was $58.2 million, or a loss of $1.92 cents per share, compared to a GAAP net loss of $51.2 million, or a loss of $1.92 cents per share, in 2020.
- Adjusted EBITDA was $96.7 million, or 32% of total revenue, compared to $99.9 million, or 34% of total revenue, in 2020.
- GAAP operating cash flow was $41.7 million, an increase from $35.6 million of GAAP operating cash flow in 2020. Free cash flow was $40.6 million, an increase from $34.5 million of free cash flow in 2020.
“We are pleased to share strong Q4 results and announce the acquisition of BA Insight,” said Jack McDonald, Upland’s chairman and chief executive officer. “In Q4 we came in above the midpoint of our guidance on revenue and Adjusted EBITDA, and we dramatically outperformed our targets on free cash flow,” he added. “Our net dollar retention rate came in stronger than expected at 94% and new bookings rebounded in Q4, up substantially from Q3.”
Fourth Quarter Business Highlights
- Our Net Dollar Retention Rate as of December 31, 2021 was 94%.
- We expanded relationships with 285 existing customers, 55 of which were major expansions. We also welcomed 121 new customers to Upland in the third quarter, including 32 new major customers.
- Upland announced our most comprehensive FileBound product release to date, which significantly expanded our capabilities around automated workflow. With this release, customers have benefited from faster, more efficient document management processes with a stronger foundation to implement digital transformation initiatives that strategically align with a long-term, remote-hybrid business model.
- Our Qvidian product introduced several new features designed to provide users the ability to create even more powerful RFP responses and proposals while increasing team efficiency, compliance, and win rates.
- We launched Cimpl Cloud, a new capability from our Cimpl product built to help customers reduce cost in their complex cloud environments, minimize security vulnerabilities, and increase compliance measures.
- After the close of the quarter, Upland closed the acquisitions of Objectif Lune, an enterprise software leader in document composition and business communication automation, and BA Insight, a leading provider of enterprise search solutions.
Acquisition of BA Insight
With the acquisition of BA Insight, Upland continues to build its knowledge management product portfolio by giving customers a powerful new way to conduct searches that span their enterprise systems to deliver relevant, personalized, and actionable results, with a technology that:
- Eliminates the blind spots by connecting search to many different systems and applications;
- Unifies search results with the ability to set up the correct, specialized taxonomies to organize, retrieve, and sort the most relevant documents;
- Delivers increasingly relevant results using analytics and machine learning to make each search better; and
- Places a search bar wherever the user wants it so they can search natively in target applications or across all the applications they use every day.
“Our acquisition of BA Insight was driven by our customers’ needs, specifically in the business services, life sciences, and legal industries, where knowledge workers are spending wasted hours using ineffective enterprise search tools trying to track down the right documents to do their work,” said Rod Favaron, President of Upland. “This is because most enterprise search technology does not connect to all relevant sources, is generic in its taxonomy when it should be specialized, and never gets better. BA Insight solves these major search challenges facing specialized knowledge teams today.”
“Our mission at BA Insight has always been to provide a personalized and connected enterprise search experience that specialized knowledge workers need to do their jobs,” said Massood Zarrabian, chairman and CEO of BA Insight. “As we join Upland, we are excited to bring our powerful open and flexible search platform to an extensive enterprise customer base and to a world class company with a long-term investment in both the knowledge management and document workflow markets.”
This acquisition marks the third in Upland’s knowledge management product portfolio.
The purchase price paid for BA Insight was $33.4 million in cash at closing (net of cash acquired), paid out of cash on hand, and a $0.6 million cash holdback payable within 15 months (subject to indemnification claims). Upland expects the acquisition to generate annual revenue of at least $8.7 million, including at least $7.5 million of recurring revenue, and will be subject to reductions for deferred revenue discount as a result of GAAP purchase accounting currently estimated at $3.0 million for the remainder of 2022. The price paid for the acquisition is within Upland’s target range of 5-8x pro forma Adjusted EBITDA and it is expected that BA Insight will generate at least $4.25 million in Adjusted EBITDA annually once fully integrated. The acquisition will be immediately accretive to Upland’s Adjusted EBITDA per share contributing at least $0.1 million of Adjusted EBITDA in the quarter ended March 31, 2022, and at least $1.6 million of Adjusted EBITDA for the full year 2022 ramping up quarterly as the acquisition is integrated into model across the calendar year.
For the quarter ending March 31, 2022, Upland expects reported total revenue to be between $75.0 and $79.0 million, including subscription and support revenue between $70.9 and $74.5 million, for growth in total revenue of 4% at the mid-point over the quarter-ended March 31, 2021. First quarter 2022 Adjusted EBITDA is expected to be between $22.0 and $24.0 million, for an Adjusted EBITDA margin of 30% at the mid-point. This Adjusted EBITDA guide at the mid-point is an increase of 1% from the quarter-ended March 31, 2021.
For the full year ending December 31, 2022, Upland expects reported total revenue to be between $313.0 and $329.0 million, including subscription and support revenue between $293.1 and $307.5 million, for growth in total revenue of 6% at the mid-point over the year ended December 31, 2021. Full year 2022 Adjusted EBITDA is expected to be between $95.0 and $103.0 million, for an Adjusted EBITDA margin of 31% at the mid-point. This Adjusted EBITDA guide at the midpoint is an increase of 2% over the year ended December 31, 2021.
Conference Call Details
Upland’s executive team will host a live conference call and webcast at 4:00 p.m. Central Time, 5:00 p.m. Eastern Time today to review Upland’s financial results and outlook for the business. The call can be accessed via a webcast on investor.uplandsoftware.com, or by dialing 1-844-200-6205 in the United States or +1-929-526-1599 if outside the United States. Attendees will need to use access code 018623 to join the call. This webcast will contain forward-looking statements and other material information regarding Upland’s financial and operating results.
Following the completion of the conference call, a recording of the webcast will be made available at investor.uplandsoftware.com for twelve months.
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